It is in our nature to ask questions. Particularly when it comes to spending money, we become a lot more cautious and ask for more information about the product or service. In case you are purchasing a laptop, for example, you will examine the RAM, CPU, screen quality, battery, storage, size, weight, etc. Additionally, you will evaluate the product and the manufacturer according to their specifications.

If that is so, why don't most people ask questions about our life insurance policies?

Buying a life insurance policy without asking your financial advisor the right questions is as good as crossing a road blindfolded. Hence, here are a few questions you MUST ask:

Question 1 – Why should I buy this life insurance policy? Are there any alternatives?

Keep in Mind – Don't let your advisor push you for one product. Ask him/her to do a financial-need analysis (to understand the type and extent of insurance required) for you. Ask your advisor for all options available to help you meet your needs.

Question 2 – How much life insurance coverage will I need?

Note – The amount of life insurance you need can be determined by carefully examining your current and future financial requirements.

Question 3 – How much is my life insurance cover?

Assess – Most of the insurance products offer a cover 10 times the annual premium you pay; however, you may still require more cover. Ask your financial advisor to assess the right amount of insurance cover for you.

Question 4 – Can you show me the benefit illustration?

Get Acquainted – Ask your advisor to explain the benefits of the plan with a company-provided benefit illustration.

Question 5 – Are the benefits guaranteed or non-guaranteed?

Crosscheck - Don't believe your advisor if he/she promises unrealistic returns to you. Check the product features in the company-provided brochure or company website, for guaranteed returns.

Question 6 – What are the factors on which the bonus depends?

Confirm - The amount of bonus declared on the policy is dependent on many factors. Ask your advisor about such factors and the guaranteed amount you will receive under the plan.

Question 7 – What are the risks of this product?

Evaluate - Check if the product you have selected has any investment risk. If yes, ask your advisor about the nature and type of risk before making a decision.

Question 8 – What are the exclusions in the plan?

Ascertain - Understand the policy exclusions in detail. Remember to ask your advisor about all situations that could make you ineligible to get the benefit amount.

Question 9 – How much of my money will be invested?

Understand - Ask your advisor what portion of the money you pay will be invested in the fund immediately. Check the allocation and other charges from the company-provided brochure or website.

Question 10 – How long will I have to pay the premium?

Plan - If your advisor tells you that you need to pay one-time or for a limited period, confirm the same with the company-provided illustration or brochure.

Question 11 – What is the lock-in period?

Learn - You will be unable to withdraw money or may get a negligible value on your plan for a certain period of time. Ask your advisor about the duration for which you will not be able to access your investment.

Question 12 – What is the process to get the claim amount?

Check - The main purpose of taking out life insurance is to ensure you or your loved ones have a hassle-free claim settlement process. You must be wondering:

  • How you or your family will receive the benefits promised in your plan?
  • In the case of multiple nominees, how will they receive benefits?
  • Will family members receive benefits if there is no nominee?
  • What documents will be required?
  • How long does it usually take for the claim amount to be paid to the family members?

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To conclude, having an insurance policy ensures your financial security. Consult a trusted financial advisor and ask all the relevant questions about your needs. Make sure you select a plan that fits your family's needs and you make an informed choice.